To
help your understanding, we have listed some of the terms and their
definitions that you maybe unfamiliar with, when buying your holiday
home in Florida.
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| Agreement
of Sale (known in Britain as Counterpart Contracts) |
A
written document in which a purchaser agrees to buy property,
which the vendor agrees to sell, under certain agreed conditions.
Also known as a 'Sales Contract'.
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| Alimony
(known in Britain as Child Support payments) |
Regular
and continuing payments paid to an ex-spouse/partner.
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| Application
(same) |
A
form commonly referred to as a 1003 form, used to apply for a mortgage
and to provide information regarding a prospective mortgagor and
the proposed security.
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| Appraisal
(known in Britain as Valuation) |
An
estimate of the market value of a piece of real estate made by a
competent professional (the appraiser) who knows local property
markets and prices.
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| Approval
(known in Britain as Agreement in Principle) |
An
assessment made by British Mortgages Abroad of an applicant's ability
to pay for a home and confirmation of the amount the applicant may
borrow.
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| Assessments
(not recognised in Britain) |
Special
and local taxes imposed upon property which benefits from an improvement
that has been made in the area.
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| Auto
Pay (known in Britain as Direct Debit) |
A
method to set up a regular payment to be automatically paid from
a bank account.
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B |
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| Binder
(not recognised in Britain) |
An
agreement to consider the purchase of real estate. The agreement
is secured and backed by a cash deposit as evidence of good faith
on the part of the purchaser.
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| Cash-Out
Refinance (known in Britain as Equity Release) |
A
refinance transaction in which the amount of money received from
the new loan exceeds the total of the money needed to repay the
existing first mortgage, closing cost and the amount required to
redeem other mortgages against the property. In short, a refinance
transaction in which the borrower receives additional cash that
can be used for any acceptable purpose.
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| Certificate
of Title (known in Britain as Title Deeds) |
A
written document stating that the title to a piece of property is
legally vested in the present owner.
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| Clear
Title (same and also known in Britain as Unencumbered) |
Title
not burdened by mortgages, charges (liens) or legal questions.
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| Closing
(known in Britain as Completion) |
In
property transactions, the delivery of a deed, the payment of the
purchase price, the signing of notes, and the paying of closing
costs, which completes the transaction.
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| Closing
Costs (known in Britain as Disbursements) |
The
various expenses involved in closing a property transaction that
are in addition to the purchase prise. Closing costs will include
title insurance fees and other relevant charges such as a Credit
Report fee.
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| Closing
Statement (known in Britain as Settlement Statement) |
Can
be known as the 'HUD-1'. The final statement of costs to be paid
to close a loan or to purchase a property.
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| Collateral
(known in Britain as Security) |
Any
property given as security for repayment of a debt.
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| Commission
(known in Britain as Procuration Fee) |
An
agent's fee for negotiating a real estate or loan transaction, often
expressed as a percentage of the purchase price or the loan amount.
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| Commitment
Letter (known in Britain as Offer of Advance) |
A
formal offer by the lender which states the terms under which it
has been agreed to lend money. Also known as a 'loan commitment'.
This letter will indicate the conditions that must be satisfied
before release of funds.
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| Condominium
(known in Britain as Flat) |
A
structure of two more housing units. Only interior area of a particular
unit is individually owned. All the owners of the individual units
jointly own the remainder of the property (land, building and other
amenities).
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| Contingency
(known in Britain as Pre-Contractual Stipulation) |
A
clause or condition within a contract stating what the buyer or
seller must satisfy before the purchase can be completed.
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| Co-operative
(no longer a British practice) |
A
residential development owned by a co-operative corporation. Residents
own shares in the co-operative, which in turn gives them the right
to live in the development. |
| Credit
Report (same) |
A
report on a individuals historic willingness and capacity to make
payments in accordance with their loan agreements in the past. This
report is provided to British Mortgages Abroad by an outside credit-referencing
agency. |
| Down
Payment (known in Britain as Deposit) |
The
agreed percentage of the purchase price a buyer pays, in cash, at
the time the property transaction closes ('completes').
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| Dwelling
Coverage (varies in Britain: 'All Inclusive' coverage) |
Insurance
coverage protects your property and any structures attached to it,
like the garage or screened porch. Any materials on your property
that are being used to extend or repair the fabric of the building,
such as timber or bricks being used for an improvement, would also
be covered.
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| Earthquake
Insurance (not recognised in Britain) |
Insurance
that compensates for damage to a property resulting from earthquakes.
The extent of coverage is limited by the terms of policy.
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| Escrow
Disbursements (not recognised in Britain) |
Use
of escrow funds to pay real estate taxes, hazard insurance, mortgage
insurance, and other property expenses as they become due.
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| Escrow
Fee (not recognised in Britain) |
Fee
charged by the escrow company for handling escrow activities including
paying off mortgages and clearing title and other debts.
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| Fair
Market Value (known in Britain as Open Market Value) |
A
figure that is the highest amount a purchaser would agree to pay
for a property and the lowest amount the vendor would be prepared
to sell at.
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| Finance
Charge (known in Britain as Total Charge for Credit) |
Charges
levied by British Mortgages Abroad that include all of the interest
due over the life of the loan, in addition to certain other charges
related to a loan.
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| Flood
Certificate (not recognised in Britain) |
A
certificate that identifies those properties situated in "special
flood hazard areas" and may require flood insurance to be arranged.
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| Flood
Insurance (same) |
A
form of insurance designed to protect property owners from loss
due to the defined peril of flood. It is required for properties
located in federally designated flood areas.
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| Foreclosure
(known in Britain as Repossession) |
Legal
process by which a borrower in default under the terms of a mortgage
ceases to have an interest in the mortgaged property. This usually
involves a forced sale of the property at public auction with the
proceeds of the sale being used to reduce or clear the mortgage
debt.
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| Good
Faith Estimate (not recognised in Britain) |
A
disclosure that must be given to all mortgage loan applicants within
three business days of an application. It is an accurate estimate
of all costs likely to be incurred at closing.
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| HUD
(not recognised in Britain) |
The
U.S. Department of Housing and Urban Development.
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| Hazard
Insurance (known in Britain as Building Insurance) |
Insurance
protecting against loss to property caused by fire, some natural causes,
vandalism, etc, depending upon the terms of the policy. |
| Homeowner's
Insurance Declaration (known in Britain as Insurance Schedule) |
A
document accompanying a homeowner's insurance policy whose purpose
is to verify that the property quoted is insured. |
| Income
Property (known in Britain as Rental Property) |
Properties
owned with intention of producing an income. Also referred to as
'non-owner occupied property' or 'rental property'.
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| Instalment
(known in Britain as Mortgage Repayment) |
The
regular monthly payment that a borrower agrees to British Mortgages
Abroad.
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| Insurance
Schedule |
See
'Homeowner's Insurance Declaration'. |
| Interest
(same) |
Money
paid to the lender for the use of borrowed funds, usually expressed
as an annual percentage.
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| Loan
Processing (known in Britain as Underwriting) |
Steps
taken by British Mortgages Abroad from the time a loan application
is received to the time the application is approved or declined.
This process includes receiving the application, credit searches
(investigation) and the overall underwriting assessment of the application.
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| Loan
Terms (known in Britain as Mortgage Conditions) |
Necessary
conditions of a loan which specify the amount borrowed, interest
rate, maturity, method of repayment, etc.
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| Loan
To Value (LTV) |
The
percentage size of the loan in relation to the value of the property.
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| Low-Documentation
(known in Britain as Self Declaration) |
Below
a stated LTV, British Mortgages Abroad only require the applicant
to state the source and the affordability of the mortgage applied
for, without providing supporting documentation payslips or trading
accounts.
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| Market
Value (known in Britain as Open Market Value) |
Also
known as 'Fair Market Value'. The professionally considered estimated
value of the property, which a seller could expect to receive under
normal conditions.
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| Maturity
(known in Britain as Loan Term) |
The
term of the loan, or the number or years for which the loan funds
are advanced.
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| Mortgage
Payment |
See
'Instalment'
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| Origination
Date (known in Britain as Completion Date) |
The
date on which the loan is funded.
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| Origination
Fee (known in Britain as Application Fee) |
A
fee charged by the lender to cover the administrative costs of setting
up a mortgage. This will include the preparation of documents and
certain processing expenses in connection with completing a mortgage
account.
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| Payoff
(known in Britain as Redemption) |
Complete
repayment/settlement of the principal balance along with interest
and any other amounts due. The payoff of an account occurs either
over the full term of the mortgage, through monthly repayments,
or through early redemption.
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| Planned
Unit Developments (PUD) (Not recognised in Britain) |
A
subdivision of five or more individually owned lots with one or
more other parcels owned in common or with reciprocal rights in
one or more other parcels.
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| Pre-Approval
(known in Britain as Decision in Principle) |
A
process in which British Mortgages Abroad will offer a decision
in principle. This opinion is based entirely on the credit search
history available to British Mortgages Abroad. The pre-approval
is not binding and not necessarily accurate because British Mortgages
Abroad will not yet have verified the application details.
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| Preliminary
Title Report (Not recognised in Britain) |
A
report made by a title company stating whether there are any other
claims to ownership of a property. A necessary step before a mortgage
loan can be approved. |
| Prepaids
(known in Britain as Prepayments) |
Those
expenses of property which are paid in advance of their due date
and will usually be pro-rated upon sale, such as taxes, insurance,
rent, etc.
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| Prepayment
Clause (known in Britain as a Redemption Penalty Clause) |
A
clause that confirms the amount of the principal balance of an account
the borrower may pay earlier than expected with or without penalty.
The terms acceptable to British Mortgages Abroad vary according to
the product selected. |
| Prepayment
Penalty (known in Britain as Redemption Penalty) |
A
charge a borrower pays to redeem or part redeem a loan before it is
due. |
| Promissory
Note |
Your
Loan Agreement with the Lender detailing all the rights, obligations
and conditions of the Loan. |
| Realtor
(known in Britain as Estate Agent/Property Developer) |
A
real estate broker or an associate holding active membership in
a real estate board affiliated with the National Association of
Realtors.
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| Refinancing
(known in Britain as Remortgaging) |
Taking
out a new laon to pay off an existing mortgage. This is usually
done to obtain a lower interest rate or to borrow further funds
against the equity in a property that may have built up since the
original purchase.
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| Sales
Contract (known in Britain as Purchase Contract) |
A
written agreement between the vendor and purchaser stating the conditions
that need satisfying for the sale to complete. Also known as an
'Agreement of Sale'.
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| Survey
(Same) |
A
map executed by a licensed surveyor, which sets down precisely the
boundaries of a given property as well as improvements, references
to known landmarks, and the property's principle features.
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| Title
Company (Same) |
A
Company that checks the title of the property you want to buy. If
they are satisfied with their enquiries they will provide you and
the lender with the reassurance of insurance cover to protect your
future interests (see below definition of Title Insurance).
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| Title
Insurance (Same) |
The
insurance that protects British Mortgages Abroad, along with the
homeowner, if an owner's policy is purchased against losses resulting
from problems with the title of a property, or unknown liens (charges)
or other inconsistencies relating to the title of the property.
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| Title
Report (Not recognised in Britain) |
A
report that discloses whether there are any competing claims, liens
(charges) or other ownership issues relating to the security address.
This is done before title insurance is issued. Also known as a 'Preliminary
Title Report'.
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| Title
Search (Same) |
An
examination of public records. Laws, and court decisions to identify
any material facts regarding liens (charges) along with ownership
of any given property.
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| Truth-in-Lending
Act (TILA) |
A
law applicable in the United States requiring disclosure of credit
terms of finance transactions using a recognised format. This is
intended to help borrowers compare the lending costs, terms and
conditions of different lenders. Also known as 'Regulation Z'.
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YOUR
HOME IS AT RISK IF YOU DO NOT KEEP UP REPAYMENTS
ON A MORTGAGE OR OTHER LOAN SECURED ON IT
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| Written
quotations are available on request. |
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